Is Financial Inclusion Cause or Outcome? A State-Wise Assessment in India

Shrabani Mukherjee and Subhadri Sankar Mallik ()
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Subhadri Sankar Mallik: Madras School of Economics

Working Papers from Madras School of Economics,Chennai,India

Abstract: Financial inclusion is considered as cause as well as outcome of inclusive growth. This study tries to construct a comprehensive measure of financial inclusion and evaluate the extent of financial inclusion for 20 major states in India for the period from 2008 to 2012 using principal component Analysis. Further, it intends to examine the extent of causal relationship between financial inclusion and macroeconomic variables such as agricultural growth, industrial growth and progress in elementary and secondary education for the states. A Panel data analysis claimed strong one way causality between financial inclusion and agricultural growth and elementary education. However, reverse causality which is acclaimed by the theory, doesn’t occur.

Keywords: Financial Inclusion; PCA Analysis; Random effect model; Ordered Probit Random effect model (search for similar items in EconPapers)
JEL-codes: C30 C33 G21 G32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-11
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